Well said Bullbound, as always.
With every level your constitution goes up. Yes you do lose armor reduction (and crit rate) , but items get better with leveling.
Fact is : the higher level you are, you earn more money on guard duty and on adventures.
Every now and then i have the opportunity to buy better items that can improve my stats by 40 or more points and that is much better than spending money upgrading them manually. That way i can level up, and stay strong at the same time and donate significant amount of gold to the guild.
As you said, after some time it will become difficult to upgrade stats when you're on money strategy. That fact itself should be enough for people to choose exp over money.

My strat is kind of different, the first 10 level I was going for exp. Then the next 20 lvl I've been into gold soo I can be more competitive. Then, after 20 lvl, I've got good stat and I will focus on exp for the next 5-10 lvl. But still, I try to get some gold quest to keep not bad stat. I think I mix up of both is a good way to keep having a good lvling pace and not soo bad stat

A bit of repetition? The level does not appear to give you damage reduction. I just leveled and my damage reduction went down. If it did, my damage reduction should have gone down. I suspect that it, like critical hits, takes a value and applies it proportionally to the calculation resulting in decreasing benefit as you gain levels.
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Crit rate does not go down as you level, crit rate goes down as your opponent levels.
The formula is luck*5/ (oppnents level*2)
The crit rate displayed on your character sheet goes down when you level because the displayed value is assuming an opponent of equal level to you.
Damage reduction seems to work the same way although I do not have a formula to prove that.
If your luck score is 500 you will have a 25% crit rate on a level 50 opponent it does not matter if you are level 1 or level 100, although the level 1 toon would display 50% and the level 100 would only display 12.5%.

Leveling is never going to decrease your overall power even if nothing else changes when you level you have gained more hit points and may very well now beat that guy you just couldnt quite get before because you now have more health and HE/SHE has a lower crit rate because YOUR level is higher.

Since I am not one to pay for "free" games, I actually have recently taken the strategy of choosing my missions based on length. By choosing the shortest missions, I increase my chances of finding mushrooms. Since I spent a number of mushrooms early in the game, I need to find them in order to afford a Griffin.

As for gold or experience, If I can level up before working, I go for exp. If going for experience will only get me close before I go to work, I go for gold. This achieves a balance which has done me well.

Also, if you are in a good guild, gold CAN BE exponential if it allow you to contribute more to your guild to increase bonuses.

As you gain levels, your gold increases in proportion. When you are in a guild whose Treasure bonus is less than maximum, it is possible to recover your donation and then some due to the bonus gold. If you invest 10 gold and your guild's bonus is able to rise to 10%, then after earning what would normally be 100 gold, you have reclaimed your original 10 gold in the form of bonus gold.

Gold increase is geometric, not exponential. The former is more common but the latter 'sounds cooler'.

As for choices:

1. If your goal in the game is cool gear and being the strongest player your level, gold may be the choice for you.

2. If your goal in the game is to be a winner, just look at the Hall of Fame. Higher level players tend to have higher honor and a higher rank while lower level players tend to hit a ceiling since no matter how long they've been on, they can't earn gold fast enough to beat higher level players' stats and equipment. Experience is king.

3. If your goal in the game is to acquire mushrooms, gear, and keys or just kill some time throughout the day, your best bet is to get the best mount you can and go with the shortest quests. This increases the number of quest views per day and increases your chances of seeing something and picking something awesome.